Iran promises licence to India for developing Farzad gas field

NEW DELHI: Iran has promised India the licence to develop ONGC-discovered Farzad-B gas field in the Persian Gulf and has asked the state-owned firm to submit an investment plan, an executive said today.

A consortium of ONGC Videsh Ltd (the overseas arm of Oil and Natural Gas Corp), Oil India Ltd and Indian Oil Corp had discovered the 12.8 Trillion cubic feet of gas reserves in the Farsi block in 2008.

"A delegation of officials of OVL, OIL and IOC visited Tehran late last month. Iran told them that the development rights for Farzad-B field are available to India," OIL Director (Business Development) B Roy told reporters here.

Roy said Tehran has so far given only verbal assurance and no firm commitment has been made.

"They want us to submit a development plan which OVL as the leader of the consortium is working on," he said.

Iran and six world powers last month sealed an accord to curb the Islamic Republic's nuclear programme in return for ending sanctions, opening prospects of Indian investments in the Persian Gulf field.

Indian firms had so far shied away from investing in Iran for the fear of being sanctioned by the US and Europe.

OVL in August/September 2010 submitted a revised Master Development Plan (MDP) for producing 60 per cent of the 21.68 trillion cubic feet of in-place gas reserves but had not signed the contract because of threat of being sanctioned by the US which is against any company investing more than USD 20 million in Iran's energy sector in any 12-month period.

Iran, in February 2012, issued a one-month ultimatum to the OVL-led consortium over the development of a gas field.

For more than two years, it did not carry out the threat of cancelling allocation of the Farsi block to OVL.

To pressure India to act, Tehran last year put the field on the list of blocks it wants to auction in future. It has however not yet cancelled OVL's exploration licence for the Farsi block which gives it the right to develop the discoveries it has made.

Roy said Iranian authorities have asked for the development plan at the earliest. Also how the gas produced is to be used - exporting via onland or under-sea pipeline to India or converting it into LNG for shipping it outside has to be detailed.

Iran, he said, has given a draft contractual regime under which Indian firms have to operated.

"OVL has submitted comments on the draft and now a development plan needs to be submitted. I can't say how much time they will take," he said.

OVL and IOC hold 40 per cent interest each in Farsi block, while the remaining 20 per cent is with OIL.